Wednesday, December 26, 2007

The Dodge Journey falls between the Caliber and the Grand Caravan in the Dodge lineu

DETROIT -- Chrysler LLC today said its 2009 Dodge Journey crossover will have a base price of $19,985, including $625 shipping.

The Journey falls between the Caliber and the Grand Caravan in the Dodge lineup, Chrysler said.

The base front-wheel-drive Journey SE is powered by a 2.4-liter inline four-cylinder engine producing 173 hp and 166 pounds-feet of torque. The SXT and R/T Journey models come with a 3.5-liter V-6 engine that produces 235 hp and 232 pounds-feet of torque, teamed with a six-speed automatic transmission with Auto Stick shifting. An all-wheel-drive system and performance suspension are options on the SXT and R/T models.

DETROIT — In January, Chrysler LLC and its dealers will bid farewell to the wicked witch.

The witch, in this case, is a controversial monthly sales incentive known as the volume performance allowance.

In 2008, Chrysler will usher in a new incentive regime to help dealers move the metal. The company will give dealers $200 for each car they buy from the factory and an additional $200 when they sell it to a customer.

The old program paid dealers a bonus based on volume. The new program pays dealers per vehicle sold, regardless of volume.

"The intent is to put the money in the hands of the dealership so they can do some planning," said Freda Bane, Chrysler dealer relations manager. "They can use it for advertising, for floorplanning or whatever."

Bane credited Chrysler's dealer council with persuading the company to come up with an acceptable alternative to the old program. When Chrysler announced the change at a dealer meeting in Las Vegas in October, dealers delivered a standing ovation.

Hayden Elder, chairman of the Dodge National Dealer Council, said eliminating the volume performance allowance and finding an acceptable replacement most dealers could be happy with were among the biggest achievements of the year in improving factory-dealer relations.

Under the outgoing program, Chrysler paid a per-car bonus of as much as $700 to dealers for reaching a sales target set by the factory. Most of the dealers who liked the program were those hitting the number.

Opponents, who included some prominent dealers, didn't like the old program because they felt it pitted Chrysler dealers against one another and set up a de facto two-tier price system. Some of those foes were hitting their targets but just felt the system was wrong.

Prominent dealers, including Mike Jackson, CEO of AutoNation, the nation's largest dealership group, spoke passionately against the incentive. "The day VPA was announced, I was against it," Jackson told Automotive News in August. "I think it's a corrosive program — the longer it's in place, the more cancerous the effect it has on a retail program. The sooner it ends, the better."

Chrysler sales executives and dealer council representatives have said that working to make all dealers profitable is their top priority in 2008.

Chrysler and Nissan seem like natural partners, a potentially awesome twosome — except that Chrysler has a terrible track record when it comes to working with other automakers. Its tie-up with Daimler-Benz ended in failure this year, and two separate alliances with Mitsubishi never came close to realizing their potential.

Nissan, on the other hand, is pretty good at it.

The two companies are discussing ideas for working together and could reveal plans as early as mid-January, according to an industry source familiar with the talks.

"Every manufacturer has strengths and weaknesses," said the source. "This allows you to get into new segments at a much lower cost than you could by doing it on your own."

By contrast, the partnership of Renault and Nissan has worked like a charm. While still separate companies, the two share vehicle architecture and supply chains, and pick and choose from each other's technology.

All of those were equity tie-ups, though, and that's not what Chrysler and Nissan have in mind, sources say.

The two companies could fill big gaps in each other's lineups.

-- From Chrysler, Nissan could solve its hybrid needs quickly and cheaply. Chrysler is one third of the trio that developed both rear- and front-wheel-drive Two Mode hybrid transmissions, along with General Motors and BMW. GM, which produces the transmissions, has been anxious to sell the technology to other automakers and could do so through Chrysler.

In around 2010, Cummins Inc. is scheduled to deliver to Chrysler two all-new diesel engines, a V-6 and a V-8. The V-6 likely will power Chrysler's light-duty pickups and SUVs, while the V-8 goes into the heavy-duty Ram pickup. These engines could power Nissan's light trucks. And there's a bonus: Like the Two Mode transmissions, the price likely will be attractive because they will be built in the dollar zone.

From Nissan, Chrysler would benefit enormously from Renault's European diesel passenger car engines. Nissan also is developing proprietary hybrid drives, as well as electric cars that Ghosn says will show up in America by 2012.

-- Nissan is struggling to gain acceptance of its Titan full-sized pickup. Now in its second generation, the truck will end 2007 selling about 65,000 units — far short of its original annual target and way below the 350,000 Rams that Dodge will sell this year.

Nissan has not ventured into the big-hauling, one-ton territory owned by GM, Ford and Chrysler. Nissan has studied the workhorse truck segment but has slow-walked the idea as the U.S. economy softened. An entry in the segment could cost Nissan $1 billion.

-- Ghosn wants to put Nissan in the global commercial van market — something its U.S. dealers have urged the company to pursue. Chrysler has long been a player in that segment, says Saul Rosen, owner of Rosen Nissan in Milwaukee and incoming chairman of Nissan's national dealer advisory board.

-- Nissan has failed to crack the U.S. minivan market in a big way. Chrysler has dominated that segment for a quarter century.

-- Nissan's U.S. car sales are closing in on Chrysler's, due partly to success of small Nissan cars such as the Versa and Sentra. Nissan is pursuing even smaller entries. Globally, Nissan and Renault have had success selling an inexpensive small car called the Logan, which may be sold in Mexico. This year, Nissan and Renault signed a deal with Mahindra & Mahindra of India to develop an even cheaper car.

Chrysler already has a deal with China's Chery Automobile Co. to produce small cars for world markets, including the United States. A car for U.S. dealerships is due in 2009. But a link with Nissan could provide another source of small cars.

Dave Cole, director for the Center for Automotive Research in Ann Arbor, Mich., says an alliance with Renault-Nissan shouldn't affect Chrysler's relationship with Chery.

"No matter who is in the game, there's a potential role for Chery."

But Cole says Chrysler also needs "a very significant global player."

"They have to develop a relationship with a strategic partner that will keep them in the game," he says. "There are players that want to play badly and that need them, one of which is Renault-Nissan."

Sales of the two cars, which share a platform, have been hugely disappointing. A team being assembled for the crash program, called Project D, will concentrate on redesigning the interiors, according to a supplier executive familiar with the program.

The team will include some senior managers and directors who took recent buyouts and are returning as contract employees, the source said.

Critics have blasted the sedans for the cheap plastic look and feel of their interiors.

The Sebring debuted in the fall of 2006, and the Avenger was launched in January. Both have struggled to find retail buyers.

Nardelli, former chairman of Home Depot, has brought the retailer's former purchasing boss, John Campi, to Chrysler as an adviser.

Simon Boag, Chrysler's purchasing chief, said he is working closely with Campi. Before going to Home Depot, Campi worked at DuPont and General Electric and is regarded as an expert in cost control and global supply chain management.

Nardelli is caught in a cash crunch as he labors to fix Chrysler. Cerberus Capital Management LP, which owns 80.1 percent of Chrysler, has a cushion of about $10 billion in cash. Nardelli is in a race against time to improve Chrysler's products while bringing costs down and increasing profit margins.

Cerberus borrowed the $10 billion from five major banks to fund Chrysler's cash needs during its turnaround. Collateral for the loan is all of Chrysler's assets, including trademarks, factories, real estate, receivables and inventory.

Those banks planned to syndicate those loans with other lenders. But the plans have been postponed twice because of lack of investor interest. Analysts say that won't hurt Chrysler operations directly but could make it more difficult for Cerberus to raise additional funds for Chrysler in the future.